Georgian Railway to Refinance Eurobonds of USD 500 million Prematurely

Georgian Railway is expected to refinance Eurobonds of USD 500 million prematurely. According to Standard and Poor’s, the company management has already launched negotiations with the investors and partner banks.

“The Eurobonds to be refinanced in July 2022 is considered as a short-term credit risk. Therefore, we maintain the negative outlook of the rating. The domestic market is too small to ensure enough liquidity and supposedly, the company will apply to the international capital markets, while the international capital markets remain less accessible to issuers from developing countries. Therefore, Georgia Railway is expected to rely on government support again. Georgian Railway has already launched negotiations with investors and partner banks. The management expects to finance the loan in the second quarter of 2021”, the new report by Standard and Poor’s reads.

The influential crediting agency approved Georgian Railway’s long-term rating at B+ level with the outlook of Negative, like Georgia’s sovereign rating outlook. According to Standard and Poor’s, the negative scenario is: Georgian Railway’s rating will decline if the independent credit profile essentially worsens. This may happen in several cases: Essential reduction of liquidity buffers because of limited access to the international capital market. Lack of government support for improving the capital structure of Georgian Railway.

Only moderate improvement of operation - it is less expected that in July 2022 GR will have created enough financial resources for refinancing the Eurobonds of USD 500 million. Positive scenario: In order to regain the outlook of Stable, it is required that GR timely refinance the 500-million-USD loan up to July 2022. Ensure steadiness of the independent credit portfolio that currently is appraised at B level. The Government’s strategy and determined plan for strengthening GR capital structure or to ensure permanent government support.